New Budget war: Zappone calls for end of commercial rates for créches

Minister attacks Ross plan for ‘granny grant’

Children’s Minister Katherine Zappone is set to demand all crèches are exempt from costly commercial rates, sparking a fresh Budget battle for childcare cash.

The minister expects crèches would pass on the savings to ensure parents pay reduced fees.

It has also emerged the minister is vehemently opposed to Shane Ross’s ‘granny grant’.

In a thinly veiled attack on Mr Ross’s proposal, Ms Zappone said she is focused on introducing “practical, realistic measures” which are in keeping with the Government’s commitments to deliver childcare supports in an “equal and fair way”.

Senior Children’s Department sources said the rate cuts proposal is aimed at centring the childcare debate on “sensible policies”.

However, cutting rates for crèches is also likely to prove controversial as other local businesses will also want the benefit. Under Ms Zappone’s plans, some 1,000 crèches would be able to cut their costs from between €5,000 and €10,000 a year.

“I have written to Cabinet colleagues pointing out that the requirement for childcare services to pay rates is also unfair – as other private educators such as fee paying schools do not have this burden,” the minister told the Irish Independent.

The announcement is the latest in a series of demands from Independent ministers and Fianna Fáil politicians ahead of October’s Budget.

Minister Ross has reacted furiously to off-the-record briefings against his proposal to introduce a grant system to reward grandparents who provide free childcare. And Fianna Fáil social protection spokesperson Willie O’Dea has laid down a marker to Fine Gael by demanding a €5 increase in the State pension.

Reducing childcare costs has been a cornerstone of the Government’s budget policy.

“As budget negotiations continue I will be seeking to put together a package of measures which will build on what has already been achieved,” Ms Zappone said.

“We owe it to children, parents and providers to continue the course we have set to change one of the most expensive childcare systems in the world into the best – this is a goal which will require continued investment across successive budgets,” she added.

However, Ms Zappone’s calls for rates cuts could spark similar demands from other businesses. Commercial rates are the largest single source of local government funding, with city and county councils expecting to collect just over €1.5bn this year, representing 32pc of all income.

While not-for-profit childcare facilities and those which only provide free pre-school care are exempt from rates, the for-profit sector is not.

A September 2016 report ‘Doing the sums: The real cost of providing childcare’ from Early Childhood Ireland (ECI), which represents the sector, found services in urban settings paid an average of €4,885 a year, with bills ranging from €100 to €24,000, while those in rural settings paid an average of €3,690, with rates ranging from €300 to €10,000.

Last December, Justice Minister Charlie Flanagan said there were no plans to provide exemptions for the for-profit providers. Rates are levied annually based on the ‘rateable valuation’ of the property, which is determined by the Commissioner of Valuation Office, and is broadly based on the rental value.

This figure is multiplied by the annual rate on valuation, also called the ‘multiplier’, which is set by councillors. As a result, the multiplier in each local authority is different.